You make money by simply putting your money in a savings account. 

But did you know that certain banks give you more money than others for leaving your money with them?

What you want to do is leave your savings in a High Yield Savings Account (HYSA).

What is an HYSA and what’s so important about it?

That’s the purpose of this article: To answer that question and to convince you to put your money in a HYSA.

What Is a High Yields Savings Account

A High Yield Savings Account is essentially a savings account that allows you to earn money by leaving your money at that bank, but it typically earns you more money than traditional brick-and-mortar banks. 

Compared to a brick-and-mortar bank, like your local US Bank that has a physical location, these savings accounts offer a higher Annual Percentage Yield (APY). 

When you shop around for a savings account, always always make sure to compare the APY. The APY is how much money your savings account will earn in any typical year.

For example, at my local credit union, the most basic savings account has an APY of 0.10%. That means if I deposit $1,000 into my savings account, do nothing with it for a year, I will have earned $1.00. Here’s a handy dandy APY calculator you can use to calculate how much you can make at your bank.

Which, if you think about it, sucks. Surely you want your money to make more than $1.00 for you?

So, how do you make sure your money makes more money for you? 

By opening an HYSA of course—and you can usually find HYSAs online. 

Why Online Banks Offer a Higher APY Compared to Brick-and-Mortar Banks

Online banks usually offer more HYSA options compared to brick-and-mortar Banks and higher APYs too.

I don’t usually see brick-and-mortar banks offering savings accounts that have an APY of over 0.50%. Most tend to fall within the range of 0.10% APY, which is why I recommend you open online banking accounts.

There are many reasons why online banks are able to offer a higher APY compared to banks with a physical location—and although I recommend you do your business with online banks, I can see why some people prefer physical locations. Let’s explore this more in-depth below.

Brick-and-Mortar Banks 

Some reasons why brick-and-mortar banks tend to have low APY is that they have higher overhead costs:

• They have to pay for the expense of operating in a physical location
• They have to pay for employees, staff, and custodial workers

But it is for you if:

• You prefer to go in person to settle your transactions and disputes
• You want things done right there and then
• You value personal 1 on 1 assistance
• You can easily access ATM networks

Cons:

• Interest and checking accounts have very low APYs

Online Banks

Online banks are able to offer higher APYs because they have lower overhead costs:

• They don’t have to pay for a physical location and the expenses associated with it
• They don’t need to hire as many employees as brick-and-mortar banks

But it is for you if:

• You want a high APY
• You prefer to do your banking online
• You don’t want to pay monthly fees 

Cons:

• It’s definitely harder to connect with someone online for help
• Not all online banks have an ATM so it’s difficult to withdraw money
• Some transactions may take longer to process

Now, Let’s Compare APYs from Some Online and Brick-and-Mortar Banks

When you have money in your savings account, you want that money to work for you, which is why choosing an HYSA is so so so important! 

Let’s evaluate the APYs of some popular brick and mortar stores:

Chase

The national average APY is 0.04%. Chase currently offers a 0.01% APY, which is way below the national average.

Wells Fargo

Wells Fargo offers an APY of 0.0–0.02% for its regular and platinum savings account. Regardless, both are below the national average.

And here’s one from my federal credit union

I’m surprised my federal credit union beats Chase and Wells Fargo. At 0.10%, it’s slightly better than both of these national banks.

Now, keep those rates in mind, and let’s move on to take a look at the APYs being offered at these popular online banks:

Ally

Ally offers a 0.50% APY, which is above the national average. Before COVID-19, this APY was actually hinging around 1.60%. That’s a lot more compared to Chase and Wells Fargo. 

Using the handy dandy calculator here, if you open a bank account with Ally with an initial deposit of $1,000 and do nothing with it for the next 12 months, you will have made $1,005.01. That’s an extra $4.01, more than just banking with Chase or Wells Fargo! At 1.60% APY, you will have earned $1,016.13!

CITI

Citi offers more than the national average, too. Noice.

Discover

It currently matches the national average, but it’s still better than Chase and Wells Fargo.

Still not convinced? Take a look at these and tell me you don’t see the difference! Here’s a table to help you out:

Brick-and-Mortar Stores	AYP	Online Banks	APY
Chase	0.01%	Ally	0.50%
Wells Fargo	0.01%	Citi	0.50%
Federal Credit Union	0.1%	Marcus by Goldman Sachs	0.40%

Overall Thoughts

In December of 2019, I switched from my federal credit union to Ally. At that time, its online savings account APY was at 1.60%. 

Over that year, I made over $130 just from my money sitting in my account for one whole year. Unfortunately, because of COVID-19, I now have to switch banks because the APY dropped to 0.50%.

Funny enough! My federal credit union has a money market account that gives 1.00% APY for account balances up to $25,000 and 0.50% for anything over $25,000. 

I plan to transfer my savings to my federal credit union, so, in a sense, what I am doing here contradicts what I have been saying above about me recommending online banks, but the situation here is unique.

Nevertheless, when you open a savings or checking account anywhere, always pay attention to the APY!

Anything 0.50% or below is considered too low! You want to put your money in a bank account that will make you money.

That’s it! 

I hope this article was helpful and inspire you to take action today! Comment down below any thoughts or questions you have. I’d love to read them, thanks!